Alfonso and Sons Purchased a New Grinding Machine Two Years

question 30

Multiple Choice

Alfonso and Sons purchased a new grinding machine two years ago at a cost of
$390 000.Last year,some revolutionary developments occurred making their machine virtually worthless as it cannot produce products which meet the higher quality standards of the newer machines.If Alfonso and Sons continue using their current machine they will lose all their customers.They have not found anyone willing to purchase the machine even at a deeply discounted price.The best description of this machine today is that it is a(n) _____ cost.

• A)erosion
• B)rationed
• C)sunk
• D)market
• E)opportunity

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Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period.

Variable Cost

Expenses that change in proportion with production output or business activity level.

Milling Machine

A machine tool used to machine solid materials, typically by cutting, boring, drilling, or threading.

Productive Capacity

The maximum output a system can produce over a specific period under normal working conditions.